Beijing or Wahington? Ecuador, China’s “strategic partner” at the time of President Rafael Correa (2007-2017), has moved closer to the United States since Lenin Moreno has been in power. But the second round of the presidential election, which, on April 11, will be played between left-wing economist Andres Arauz, close to Mr. Correa, and ex-banker Guillermo Lasso, could change the situation. Especially since the health crisis linked to Covid-19 has further increased the financing needs of this small indebted country.
On December 9, 2020, Adam Boehler, director of the Financial Corporation for Development (DFC), an institution created by Donald Trump to counter China’s influence in developing countries, announced the signing, with the government of Lenin Moreno, of a framework agreement that he described as ” new model “. This agreement – which has not yet been validated by the board of directors of the DFC – would grant Ecuador a line of credit of 3.5 billion dollars (2.9 billion euros) to prepay a part of the debts, monetize its assets and finance productive investments.
In exchange, according to the daily Financial Times, the Latin American country would commit to excluding Chinese companies from the strategic telecommunications sector and its 5G network. The intention is clear. “The Americans are testing their strategy in Ecuador to oust China from the mainland”, summarizes Paulina Garzon, director of the China-Latin America Sustainable Investment Initiative.
Opacity of contracts
“Asset monetization is the new name for the nationalizations of public enterprises, recalls Ecuadorian economist Po Chun Lee. The recipe is not new. ” Will the term be enough to reassure the spirits and the demonstrators? In October 2019, at the call of Indian organizations, they blocked the country for several days to protest against the increase in the cost of gasoline and other adjustment measures demanded by the International Monetary Fund (IMF). Investors fear that Mr. Arauz is abandoning the multilateral body and austerity. His supporters hope so.
It was in 2008 that China – in full expansion – and Ecuador moved closer, after the country defaulted on part of its debt, deemed “Illegitimate and odious” by President Rafael Correa. Quito turns to Chinese banks and loans for oil are being negotiated on very little transparent terms. Since then, Ecuador has delivered to the Asian giant more than 80% of its crude exports. Deliveries are expected to end in 2024.
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